In acquisitions, it depends on the particular year whether our acquisitions are heavy funeral or have heavy cemetery. But ultimately, you could add, call it, 2,000 to 4,000 funeral services in a particular year related to a full amount of acquisitions. So you have that natural effect. You have the acquisition effect which is specific to our company and what is being watched in this situation, specifically in 2024, is the pull-forward effect related to COVID. And remember, we had some noise in the last couple of years with excess deaths as well coming out of COVID. And that’s impossible at this point to differentiate really. There’s not the data out there to make any further comment on that. But the COVID pull-forward effect, excess debt pull-forward effect is kind of washing the natural progression of the baby boomers, coupled with our acquisitions and calling us kind of flattish.
I think that’s better those particular factors than they were last year. That drove us down mid-single digits. And we hope, and we’ll give you better a comment as the year progresses, that you’ll start seeing a little bit of an uptick in net volumes, as I described it to you this morning as we move forward in future years.
Tobey Sommer: If you are able to be a little bit more active on the acquisition front after the standstill agreement. And you mentioned some markets that you would find attractive, but haven’t really been focusing on recently. What would that entrance into those markets and sort of fleshing those out, what would that do to the contours of profitability at the firm? Is that something that would be observable or so small as to not really have an influence?
Eric Tanzberger: Well, I think it’s built into the growth framework. When you think of the 8% to 12% earnings per share growth you’re looking at some acquisitions and share repurchases could be up to maybe half of that growth. The rest being organic, currently being driven by better average for sales at the funeral homes and most importantly, the significant preneed cemetery growth that we’ve seen lately and over the years that we’ve talked about at length. I’ve already kind of given you a statistic that said that any time we’re growing depends on the year, you could add 2,000 to 4,000 cases of funeral volumes per year for the full load of acquisitions and such. So is it material? Of course, it’s material, but we don’t think that the new markets after the SCI with Steward situation expires is going to be an absolute game changer.
I mean this is a situation where we have very long-term relationships. Our field operations, our management here has done a very good job having long-term relationships with independents that certainly we would love to talk to. And what Tom said, just to reiterate, we talk to them now. It just is going to be their decision when they want a liquidity event for their generational planning and for their particular family. And trust me, they don’t have any idea, in my opinion, that whether an FTC mandate is coming due or not coming due for SCI.
Thomas Ryan: Tobey, maybe the better way to think about it is what’s happened in the past is, it was a competitive situation where we would be asked to look at a business, we were at a competitive disadvantage because the seller would know that we have to get prior permission. So maybe that’s a better way to think about it is we were kind of behind the 8 Ball because we introduced risk into a transaction that our competitors didn’t have to deal with. And that should become more competitive as we move through this May date.
Tobey Sommer: Very helpful. And then last thing for me. Is there any change in the increasing pace of adoption of cremation, anything to think about? Or is that sort of steady state? Just thought I’d touch base on that.
Thomas Ryan: Yes. I think it’s steady state. We saw a contraction of the rate, but again, I think if you looked over long periods of time, you’re going to have quarterly fluctuations, but we still stick by the 100 to 150 basis point expectation.
Tobey Sommer: Thank you very much.
Operator: The next question comes from John Ransom of Raymond James. Please go ahead.
John Ransom: Hey, good morning guys. Just turning to your guidance. Could you talk about just your expectations for preneed cemetery production and recognition rate compared to 2023?
Thomas Ryan: Yes. So I think on the projection side, John, if you think back, we historically have said we think we could grow cemetery sales production in the, call it, 3% to 6% range. That’s kind of steady-state same-store. Obviously, there’s times that we went above that range. There’s times we’ve been below that range. I think the way to think about next year is instead of a 3% to 6%, we’re just dial it down a tiny bit, call it 2% to 5%. And the reason for that is we did a lot of leads through funeral volume traffic and traffic through the cemeteries. So as you think about the pull-forward effect, we’re going to have slightly less leads to follow up on. And that’s what we’re factoring into our numbers. Now again, can we surprise to the upside, I think so. But we need to get through the year to understand better where we are, if that makes sense.
Eric Tanzberger: And John, from a recognition rate perspective, as you know, we talked about that on the last call as well, and we thought it would be in the upper 90s for the fourth quarter, and it was. Generally, we look at a full year right now kind of in the mid-90s from a recognition rate. So the 95% ZIP code from that. Remember that can move over the quarter. So it usually starts off somewhat light in the low 90s and works its way as we complete projects during the summer months and towards the end of the fall, where it could be as high as what you saw in the fourth quarter, 98% or even 100. But generally, we think it’s — we’re to the point now where I think it’s somewhat stabilized and when you’re modeling, I think it’s about 95%-ish of the production should come through the income statement in a full year period for cemetery.
